Many multinational organizations have realized that creating positive social impact is not necessarily an act of charity; it also helps improve the bottom line. This has led to a move from philanthropy-oriented social responsibility programs to closer-to-the-core initiatives—or strategic social partnerships (SSPs)—in which the impact on return on assets (ROA) and return on investment (ROI) are recognized and recorded.

However, SSPs come with a special set of challenges, given their aim to create business value and the varying needs and interests of partners. These challenges and a roadmap to guide companies that opt for this path are discussed in the article, The Roadmap Toward Effective Strategic Social Partnerships, by John Mennel, a director in the Emerging Markets practice with Monitor Deloitte; Tina Mendelson, a principal with Deloitte Consulting LLP; Bill Marquard, a director in the strategy consulting practice of Monitor Deloitte; and Kellie McElhaney, Ph.D., the John C. Whitehead Faculty Fellow and founding faculty director of the Center for Responsible Business at the Haas School of Business.

The article provides executives and boards examples of current SPPs as well as an explanation of the steps used to build such partnerships, including:

Identify the objective: Define the social impact the organization seeks to create and understand the landscape, such as the end consumer’s needs, likely partners and the problems that need to be solved.

Develop a framework: Identify the organizations that are likely to help achieve the set goals and establish a governance framework with clearly defined roles and responsibilities.

Communicate value: Develop a narrative that will resonate with stakeholders to demonstrate the value of the partnership to all parties.

The concept of “shared value,” a term introduced by Michael Porter and Mark Kramer in 2011, has become accepted by many forward-thinking companies and business leaders. After all, improving the bottom line while creating positive social and environmental impact is a classic win-win scenario. Also, when implemented well, shared value strategies can fundamentally change a company’s competitive positioning and the way it relates to customers, employees, suppliers and investors. What’s not to like?

Nevertheless, shared value is often not so easy to implement, especially within large, complex global corporations and often requires a complete reevaluation of partnerships: one of the major implementation modalities for shared value. For many companies, creating and managing truly strategic relationships with partners outside the business sector—with community groups, non-profits and governments—is a new skill, and there is often a reluctance to commit because of organizational inertia, a fear of risk and a perception—whether accurate or not—that non-profits and the public sector are inherently inefficient and hard to work with.

However, the authors see some companies developing deep competence in partnerships, and a new model that they call strategic social partnerships (SSPs) emerging in those companies. SSPs are often implemented jointly by the corporate social responsibility (CSR) department, the philanthropy function and the core business functions; they are given high visibility in public reporting; they establish complementary roles for each partner leveraging the skills, resources and sense of mission of each; and they receive substantial investments of time and money, including significant C-suite attention.

While the importance of shared value as a concept seems on its way to widespread acceptance, implementation challenges have continued to dog efforts to scale up, preventing many efforts from achieving their full potential and resulting in some costly and public mistakes. Mastery of the skills needed to identify, create and manage SSPs can make the difference, enabling companies already practicing shared value to scale up their efforts and providing a way for those still sitting on the sidelines to get into the game. Getting SSPs right can also help corporate, non-profit and the public sectors align social impact to business opportunities, create distinct competitive advantage and identify innovative solutions to solve tough social and development problems.

Read the full article to learn how global companies are developing and managing strategic social partnerships and what action steps executives and boards can take if they are considering entering into this type of partnership.

Related Deloitte Insights

Until recently, sustainability has not been viewed as a strategic priority for finance. But proponents of sustainability—including investors, consumers, regulators and others—are demanding that companies think more broadly about the impacts their operations and decisions have on the environment and society. Emerging standards not only simplify sustainability reporting but may also provide companies with insights that can improve performance. Learn about these standards and related steps that can be taken to incorporate sustainability reporting into both risk-management and value-creation activities.

Until recently, sustainability has not been viewed as a strategic priority for finance. But proponents of sustainability—including investors, consumers, regulators and others—are demanding that companies think more broadly about the impacts their operations and decisions have on the environment and society. Emerging standards not only simplify sustainability reporting but may also provide companies with insights that can improve performance. Learn about these standards and related steps that can be taken to incorporate sustainability reporting into both risk-management and value-creation activities.

Mary Schapiro, vice chair of the Sustainability Accounting Standards Board (SASB) and former chair of the U.S. Securities and Exchange Commission, has witnessed the rapid evolution of sustainability disclosures. Instead of asking how companies affect sustainability issues, investors are now asking how sustainability issues affect companies—in particular, their financial performance. Speaking with Kristen Sullivan, Advisory partner, Deloitte & Touche LLP, Ms. Schapiro discusses changing expectations within the investor and analyst communities, SASB’s work in developing a framework for disclosure across 79 industries, and its role in improving reporting, among other topics.

Views & Analysis

From a regulatory perspective, the lines between fintech and traditional financial institutions are starting to blur, bringing greater regulatory expectations, along with potential penalties and legal actions for noncompliance. Regardless of whether fintech companies decide to become a bank chartered institution, they can increase their potential for success by having solid risk management controls in place. That differentiation might open doors to market share and revenue growth, as well as provide a level of comfort to a variety of stakeholders.

Effective governance remains a top focus for U.S. banking sector regulators, with a strong emphasis placed on sustainability, accountability, holistic end-to-end views and conduct. Regulators have been assessing their rules, guidance and supervisory expectations with an eye toward improving the effectiveness of outcomes. As a part of this trend, the Federal Reserve Board is signaling a new age of governance and accountability through recent proposals on board effectiveness, a new rating system for large financial institutions and supervisory expectations for senior management, business line management and independent risk management and controls.

In 2018 banks are focused on becoming more strategically oriented, technologically modern and operationally agile. To do that they will have to address multiple challenges, including a restive customer base, regulations, legacy systems, disruptive models and technologies, new competitors, cyber risk and workforce transformation. Priorities and potential solutions will vary by business line. Scott Baret, vice chairman, U.S. Banking & Capital Markets leader, Deloitte & Touche LLP, discusses how these challenges are impacting retail and commercial banks, wealth management firms, and payments and capital markets businesses.

Editor's Choice

As chief risk officer of American Express, Paul Fabara is remaking compliance and risk management by driving the use of technology and data analysis, including development of an early-warning system to detect potential risks. He discusses how he has worked with the business units and board to carve out a new role for compliance and risk and how the functions have ramped up to contribute to decision-making at the operational and strategic levels, with Ash Raghavan, principal, Deloitte Risk and Financial Advisory, Deloitte & Touche LLP.

Nearly 40% of North American CFOs participating in Deloitte’s fourth-quarter 2017 CFO Signals™ survey say their company will take above-normal risks in pursuit of higher returns, up from 25% a year ago, and 63% say now is a good time to be taking on greater risk. Sanford Cockrell III, national managing partner of Deloitte’s U.S. CFO Program, notes that CFOs’ optimism about their own companies’ prospects rebounded to the third-highest level in the survey’s history. Still, some CFOs have some concerns about constraints to their organization’s performance, including talent challenges.

Developments in 2017 demonstrate the range and depth of the challenges facing boards. Perennial challenges include strategy, risk, compensation, shareholder engagement and regulatory uncertainty. Adding to the list are board composition, social responsibility, technology risk, culture risk and the combination of innovation and disruption. Learn more about what investors, regulators and other constituencies may expect boards to address in the year ahead.

About Deloitte Insights

Deloitte’s Insights for C-suite executives and board members provide information and resources to help address the challenges of managing risk for both value creation and protection, as well as increasing compliance requirements.